The unsustainable public pension problem is exemplified in California, where the state must cough up money to keep the defined-benefit program paying out to keep its promises. Voting for increases in public pension benefits is popular, since it’s an expensive debt that won’t come due for a while.
A while is starting to be now in California: backfilling pensions is pulling $3 billion out of the general fund each year. Costs for the pensions have grown 2,000% in the past decade, while state revenues grew by just 24%.
Over at Reason, Matt Welch points out a coming conflict:
As ever, a thick chunk of the California commentariat refuses to grapple with the zero-sum reality of pension spending crowding out favored social programs.
This will play out all over the country, with an astonishing “solution”: let the pension obligations continue to grow exponentially, and raise taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. es to prevent cuts to social programs. It’s not a sound strategy and one that just postpones the day of reckoning.Share